Interdigital Commc’ns, LLC v. Int’l Trade Comm’n
By James Grace – Edited by Ashish Bakshi
The Supreme Court denied Nokia’s petition for a writ of certiorari, Denial of Petition for Writ of Certiorari, Interdigital Commc’ns, LLC v. Int’l Trade Comm’n, 707 F.3d 1295 (Fed. Cir. 2013), cert. denied, No. 12-1352 (U.S. Oct. 15, 2013), upholding the United States Court of Appeals for the Federal Circuit’s finding that Nokia had violated Section 337 of the Tariff Act of 1930, 19 U.S.C. §1337 (“Section 337”), by importing into the U.S. cell phones that violated two U.S. patents owned by InterDigital. Interdigital Commc’ns, LLC v. Int’l Trade Comm’n, 707 F.3d 1295 (Fed. Cir. 2013).
In denying the petition without comment, the Supreme Court did not address Nokia’s question concerning the International Trade Commission’s (“ITC”) jurisdiction over the case. The Federal Circuit held that “licensing alone” could satisfy the “domestic industry” requirement of Section 337. Petition for Writ of Certiorari at 12, Interdigital, 707 F.3d 1295, cert. denied, No. 12-1352. (“Petition”). Nokia had argued that InterDigital had failed to meet the “technical” prong of the domestic industry requirement because it merely licensed its patents and did not manufacture “articles protected by the patent.” Id. at 17-18.
Bloomberg.com provides an overview of the litigation and comments on the significance of the decision for Nokia, InterDigital and other technology companies.
The litigation involved Nokia, a Finnish cell phone manufacturer, and InterDigital, a Pennsylvania-based licensor of intellectual property to the cell phone industry. Petition at 5. As reported previously by JOLT Digest, InterDigital owned, prior to 2012, a portfolio of 1,700 patents relating primarily to wireless technology.
In 2007, InterDigital filed a complaint with the ITC alleging that Nokia had violated Section 337. Certain 3G Mobile Handsets and Components Thereof, Inv. 337-TA-613, USITC Pub. 4145 (October 16, 2009) (Final). Section 337 gives the ITC the authority to exclude from entry into the U.S. articles that infringe a valid U.S. patent. 19 U.S.C. § 1337(a)(1)(B). InterDigital alleged that Nokia had imported cell phones into the U.S. that infringed two of its patents concerning technology for reducing cell phone interference. Petition at 5-8.
In order to prevail in a Section 337 investigation by the ITC, patentees must show that there is a “domestic industry” in the U.S. “relating to the articles protected by the patent.” Interdigital, 707 F.3d at 1297. In 2009, the ITC made a summary determination that InterDigital had satisfied the domestic industry requirement. Petition at 8. The ITC reasoned that InterDigital had satisfied the requirement by “demonstrating that it ha[d] invested a substantial amount of money in a licensing program to exploit the asserted patents.” Id. However, the ITC subsequently determined that Nokia had not infringed InterDigital’s patents. Id. at 10.
On appeal, the Federal Circuit panel found that the patent claims were not properly construed by the ITC and held that Nokia had infringed InterDigital’s patents. InterDigital Commc’ns, LLC v. Int’l Trade Comm’n, 690 F.3d 1318, 1322 (Fed. Cir. 2012). The Federal Circuit affirmed the ITC’s finding that the domestic industry requirement had been satisfied, holding that the text of Section 337 “makes clear” that the requirement can be “based on licensing alone.” Id. at 1338.
Nokia petitioned the Federal Circuit for panel rehearing and rehearing en banc. Interdigital, 707 F.3d 1295. In denying Nokia’s petition, a divided Federal Circuit reaffirmed its previous position that licensing activities were a sufficient ground to claim relief under Section 337. Justice Newman argued that licensing alone was insufficient to satisfy the domestic industry requirement and stated that the majority’s position was inconsistent with previous case law as well as the purpose and text of Section 337. Id. (Newman, J., dissenting).
Nokia speculates that the ITC may become the preferred forum for non-practicing entities – those engaged in licensing patents but not in practicing the patented technology – to pursue patent infringement claims. Petition at 14. In order to obtain injunctive relief for patent infringement in federal district courts, the complainant must satisfy the four-part test articulated in eBay v. MercExchange, L.L.C. eBay v. MercExchange, L.L.C., 547 U.S. 388 (2006) (Hosted by FindLaw). In eBay, Justice Kennedy suggested that an entity engaged solely in licensing is unlikely to satisfy the four-part test, since damages would be a sufficient remedy. Petition at 14. However, the four-part test is inapplicable in ITC proceedings, making injunctive relief easier to obtain in that forum. Id. Relying on the Federal Circuit rulings, non-practicing entities now have greater certainty that their claims for injunctive relief in the ITC will not be defeated for failure to satisfy the domestic industry requirement.
The Supreme Court passed on the opportunity to clarify the ITC’s jurisdiction and role in adjudicating patent disputes. In the short term, the decision provides InterDigital with the leverage to extract licensing fees from Nokia. In the long term, the decision may trigger an increase in the proportion of ITC adjudications that are directed toward patent disputes.